Major Victory for Home Buyer Tax Credit and NOLs
In a major victory for NAHB that will boost the fledgling housing recovery and help struggling business owners nationwide, on Nov. 5 Congress approved legislation that will extend the first-time home buyer tax credit beyond its Nov. 30 deadline and will allow all business with operating losses in 2008 or 2009 to claim refunds on taxes paid up to five years ago.
 The proposal that was signed into law today by President Obama will allow businesses to offset 100% of taxable income with NOLs carried back in years one through four and offset 50% of income in year five.
Small businesses with less than $15 million in gross receipts would be able to claim a five-year carryback for 2008 losses under the American Recovery and Reinvestment Act and for 2009 losses under the new law.
In a memo from NAHB Chairman Joe Robson to the federation about this legislation, he writes, "The new net operating loss provisions will throw a lifeline to struggling businesses, allowing them to continue making payrolls, paying business loans and otherwise keep their doors open until the economic recovery takes hold."
Tax Credit and NOL SNAPSHOT:
Homebuyer Tax Credit
- Extends the $8,000 tax credit until April 30 for first-time buyers of single family homes and condos.
- Creates a new $6,500 tax credit for move-up buyers for the same period.
- Both would have an additional 60 days (June 30th) to close on the home.
- Income limits for both groups would be $125,000 for individuals and $225,000 for couples.
- For step up buyers, they must have been residing in their primary residence for 5 consecutive years out of the last 8. (Meaning you could have sold less than 3 yrs ago (thus not be a first-time buyer), but qualify as a move-up buyer if you had 5 years before you sold.)
- Eligible purchases under the credit are limited to homes that cost less than $800,000.
Net Operating Loss Carryback
- Five year carryback for NOLs in either 2008 OR 2009, not both.
- Years 1-4 allow for 100% use of NOLs, year 5 is limited to 50% of a company’s taxable income in that year.
- No size limitation or other cap.
- Unused NOLs in year 5 are still eligible for 20-year carry forward.
NAHB’s consumer-oriented Web site, www.federalhousingtaxcredit.com, is being updated right now, and will provide complete details on the enhanced home buyer tax credit after the bill is signed into law by the President.
NAHB will launch a set of resources to help you understand and promote the new tax credit over the next couple of days. Check www.nahb.org/taxcreditmaterials early next week.
Read a memo from NAHB Chairman Joe Robson to the federation about NAHB’s role in getting this legislation passed here.
View the press release here.
If you have questions about the tax credit resources, please contact NAHB Public Affairs or call 800-368-5242 x8447.
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